Vicano, one of Southwestern Ontario’s most active industrial developers, has launched construction of a 440,000-square-foot logistics facility in Brantford, a hot market for the past four years which has millions of square feet in the development pipeline.
The family-owned company, which is involved in both development and construction, has also secured a tenant for 182,000 square feet of the building. The deal with Tenaxx Logistics Inc. prompted Vicano to begin construction at 151 Garden Ave., adjacent to the 1,500-acre Braneida business park.
“We did not start it on spec,” vice-president Paul Vicano told RENX. “We had secured the lease with Tenaxx prior to making the big financial commitment of ordering steel and getting underway of construction.
“There may have been a time in the past year or two when speculative development may have been possible in that 500,000-square-foot range in our market, but I don’t know if that’s the case today.”
Tenaxx is a Brantford-based 3PL company specializing in warehousing, distribution and freight brokerage services. It will be expanding its operations in the new facility.
The SW Ontario industrial market
Vicano said 258,000 square feet remains available for leasing at the 19.6-acre Garden Avenue property.
It is being launched in an increasingly competitive market in terms of the national industrial asset class as well as conditions in Southwestern Ontario and, more specifically, Brantford and surrounding environs.
After a four- or five-year run of industrial demand far exceeding supply, there are signs the market is beginning to stabilize.
A high volume of construction in recent years means supply might finally be catching up to that demand and millions more square feet remain in the development pipeline.
Vicano said he used to hear that demand was four times higher than available supply. That’s not a figure he ascribes to today, though there is still expansion in the sector and a healthy desire for modern space among potential tenants.
“I think there is a more balanced market and a more normalized market from where we were,” he explained, “which is comfortable for a lot of people, but I just don’t think it lends itself to building on spec at the moment.”
That’s why Vicano wanted at least one tenant commitment before moving ahead with the project.
He said it also provides a competitive advantage in a market where Vicano estimates there are about 18 million square feet of potential industrial space in the development and pre-development pipeline.
151 Garden “actually under construction”
“This is an actually under-construction project,” Vicano said. “Steel is going to be delivered the third week of August and by Sept. 5 or 6 steel is going to start being erected.
“In today’s environment of long entitlements, tenants and brokers are getting sheepish to come to the table with offers to lease because timelines are difficult to put your thumb on. So when an owner or developer says they can deliver a product by a certain date, if they haven’t got steel on order, there is a reluctance to commit on the tenant side.
“The project is underway, the foundations are in, steel is being delivered in the next 30 days and we are delivering that building, no matter what, Q3 of 2024.”
Vicano called the building “today’s modern class-A warehouse”, featuring 42-foot clear height ceilings, ESFR sprinkler systems, a high loading dock ratio (there are 37 trailer docks), LED lighting, excess trailer parking and build-to-suit office facilities.
Leasing rates for premium space in the market are approximately $13 per square foot. While still less expensive than Toronto, Vicano said the increases have happened very quickly.
“New construction similar to what we’re doing on Garden Ave., $13 is not being shied away from so far as an asking minimum net rent rate for new space,” he noted. “I remember doing deals not long ago, in 2017, sub-$5 per square foot, $4.95 per square foot.
“Then it just crept up and crept up. In 2020, everything just went crazy.”
Vicano developing other properties
Vicano’s company is active on several other fronts, even after selling a 350-acre tract of its development land just outside the city in February to Orlando Corp.
That $190-million transaction involved 982-986 and 1036 Powerline Rd. near Paris, properties Vicano had assembled for potential future development.
Its other current development sites include in St. Thomas, adjacent to the under-construction Volkswagen battery plant, where it has completed and leased two of five buildings which will total about 350,000 square feet.
Construction is just getting started on Buildings 3 and 4.
Vicano has three other properties in various stages of development:
- a 13-acre site in Hamilton across from the IKEA distribution centre property which has conditional approval for 210,000 square feet;
- a site at 1 Ambitious Ct., in Hamilton where it is completing construction on 115,000 square feet of space for three tenants; and
- a Brantford property where it’s in the approvals process for 140,000 square feet of development.
Vicano is also expanding its office space, having grown to about 85 employees in administrative and on-site roles.
It acquired the three-storey former city-owned forestry building downtown at Victoria Square in Brantford and is renovating one floor, about 5,700 square feet, for the new office.
It will lease the other two floors, which each have about 5,000 square feet of space.
“It’s going to be an interesting move, because we’ve never shared an office with other tenants,” Vicano noted.